Hazard Insurance

Please read the guidelines below to learn more about CHFA's hazard insurance coverage requirements. For more information, read Section 604 of the Seller's Guide.

The hazard insurance policy must protect against loss or damage from fire and other hazards covered by the standard extended coverage endorsement. The coverage must provide for claims to be settled on a replacement cost basis.

The required insurance amount will be the lesser of:

• 100 percent (100%) of the replacement value of improvements; or
• the unpaid principal balance of the First Mortgage Loan plus any CHFA Second Mortgage Loan.

However, under no circumstances may the amount of insurance be less than 80 percent (80%) of the replacement value of the improvements.

To determine if the coverage amount is sufficient, the Participating Lender should total the Policy Coverage Limit for the Dwelling and Other Structures as shown on the evidence of insurance, without consideration for the Extended Replacement Cost. The Extended Replacement Cost is intended to cover inflationary increases in the cost to replace the Improvements and is not to be used to "gross up" the policy coverage amount.

The "replacement value" of the improvements may be determined by referring to any Total Estimate of Cost-New as shown in the Cost Approach to Value section of the appraisal. If the appraisal does not contain a Total Estimate of Cost-New, the replacement value may be determined by subtracting the land value on the appraisal from the appraised value of the property. If the land value is not on the appraisal, the actual (not assessed) land value on the County assessment may be used. The maximum deductible is one thousand dollars ($1,000).

Please contact us with any questions.

303.297.7376 or 1.888.320.3688 Denver
970.241.2341 or 1.800.877.8450 Western Slope

Thank you,
CHFA Home Finance